Lehigh Valley International Airport has scrapped its plan to add a $5 million U.S. Customs station, and by year's end it will likely have served the fewest passengers since 1985.
Yet, for the first time in two years, airport officials say they have reason to be optimistic about passenger traffic at the financially struggling airport in Hanover Township, Lehigh County.
After weathering declines of 17 percent in 2012 and 14 percent last year, the airport is on pace to see a roughly 3 percent reduction in passengers this year. That's not exactly a reason to schedule a parade, but after beginning the year with double-digit losses, passenger traffic has been up in three of the past six months.
In other words, it appears the bleeding has stopped.
"The iceberg has been struck and they didn't sink. The worst is over," said Michael Boyd, chairman of Boyd Group International, an aviation consulting firm in Evergreen, Colo. "They have reason to be optimistic because there's nothing on the horizon to suggest further declines. They're right where they're going to be for the foreseeable future."
Still, the airport will not need a federal inspection station that was once pitched as a way to boost passenger traffic by serving people seeking direct flights to vacation destinations such as Cancun, the Dominican Republic and Jamaica.
Two years ago, the Lehigh-Northampton Airport Authority drafted a plan to raise $5 million to install a U.S. Customs station that would allow passengers to take international flights. The authority conducted a study, applied for grants and even set a two-year schedule to have it done. Since then, airline interest for using such a station has withered and no money beyond a $1.5 million state grant has been raised.
"We don't have the money, but even if we did, we wouldn't build it because the airline interest isn't there," Airport Executive Director Charles Everett Jr. said. "Other federal inspection stations are not doing well."
The stations he is referring to are at Atlantic City International Airport and Stewart International Airport in New Windsor, N.Y. Both installed federal inspection stations in the past decade, but neither has any international passenger flights on its schedule, serving only sporadic corporate jet traffic.
Boyd suggested that LVIA's decision to abandon plans for an inspection station is a blessing in disguise. He said a short-staffed U.S. Customs and Border Protection agency has been reluctant to staff new facilities at smaller airports, largely because they're not cost-effective.
"Customs would have never staffed a facility in Allentown, and the airport would have never gotten enough traffic to justify the cost," Boyd said. "It was a good thing to look at, but it's even better that they gave it up. It means they understand the reality, which is that it's a money-loser."
There are other reasons to be optimistic, Everett said. After experiencing declines in 23 of the 24 previous months, the airport has seen gains in three of the last six. In addition, its largest carrier, Allegiant Air, has had a 14 percent increase in its passenger business at LVIA and it has responded by increasing its seating by replacing its 70-seat planes with 100-seat jets.
But part of the reason all that brings optimism is largely because the past two years have been so depressing. Even as the authority was selling off assets to help pay a $26 million court judgment against it for taking a developer's land in the mid-1990s, aviation economics that have hurt smaller airport across the county sent LVIA's passenger traffic into a tailspin. After peaking at more than 1 million passengers in 2004, the airport's traffic dipped to just 621,000 in 2013 — the fewest passengers since 1985.
Those declines were brought on when American Airlines pulled out of LVIA in 2011 because it couldn't turn a profit, Direct Air went bankrupt, AirTran left in 2012 after merging with Southwest Airlines, and Frontier Airlines pulled out last year.
Part of the reason the recent months have posted gains is because they're being compared with abysmal months from last year at this time.
And there's a chance that this year's passenger count will fall below last year's. It's currently running about 3 percent behind last year, putting the full-year projection at about 603,000.
But barring something unforeseen, Boyd contends this is where LVIA is likely to stay. Its four remaining operators appear entrenched and its market outside the metro areas of New York and Philadelphia remains solid.
Expecting gains in the coming years would be unrealistic, but the steep declines would appear to be over.
"I think we should be optimistic. We are now holding our own," Everett said. "Where we are now is the new reality."
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- Air Transportation Industry
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- U.S. Customs and Border Protection